Lanterna Rally

Author: Congressional Research Service: The Libr

Publisher:

Published: 2013-11

Total Pages: 26

ISBN-13: 9781294250302

Short-time compensation (STC) is a program within the federal-state unemployment compensation system. In the 20 states that operate STC programs, workers whose hours are reduced under a formal work sharing plan may be compensated with STC, which is a regular unemployment benefit that has been pro-rated for the partial work reduction. Although the terms "work sharing" and "short-time compensation" are sometimes used interchangeably, the term "work sharing" refers to any arrangement under which workers' hours are reduced in lieu of a layoff. Under a work sharing arrangement, a firm faced with the need to downsize temporarily chooses to reduce work hours across the board for all workers instead of laying off a smaller number of workers. For example, an employer might reduce the work hours of the entire workforce by 20%, from five to four days a week, in lieu of laying off 20% of the workforce. Employers have used STC combined with work sharing arrangements to reduce labor costs, sustain morale compared to layoffs, and retain highly skilled workers. Work sharing can also reduce employers' recruitment and training costs by eliminating the need to recruit new employees when business improves. On the employee's side, work sharing spreads more moderate ...